The Cairo daily, Al-Ahram, on 17 December quoted Fahmy as saying the payments surplus was $510 million in the 2000/01 financial year (July-June), and has reached some $300 million in the first half of 2001/02. The account slipped into deficit for the first time since the early 1970s in 1998/99.

Fahmy says there are several factors behind the turnaround. The fall in oil prices has brought some benefits because it has lowered the cost of importing products such as diesel and liquefied petroleum gas (LPG). The bills for these products have been reduced further following the start-up of a new gas-processing plant by Egyptian Natural Gas Company (Gasco)and the start of production at the Midorrefinery in Alexandria.

Egypt has also benefited from revisions to 11 agreements to purchase gas from three of the leading foreign operators - the Royal Dutch/Shell Group, BPof the UK and Italy's Eni. The new terms entail putting a ceiling and a floor to the crude oil reference prices for these gas purchases. It meant in effect that Egypt was protected from paying surcharges when oil prices were over $20 a barrel.

Fahmy says there has also been a modest recovery in Egyptian crude oil production, meaning that domestic refineries can secure all their feedstock needs from the government's share in oil output, rather than fulfilling some of their needs from the foreign oil companies. He says total hydrocarbons output is now running at about 1.3 million barrels of oil equivalent a day, including 640,000 barrels a day (b/d) of oil, 90,000 b/d of condensates and 2,600 million cubic feet a day of natural gas. During 2001, oil production in the Western Desert has risen by 6 per cent to 150,000 b/d. Fahmy says a string of oil discoveries in the Western Desert and the Gulf of Suez over the past four months has added some 175 million barrels to total reserves.

Fahmy includes recently started exports of gas and petrochemicals in the overall balance of payments tally for the sector. He says that during 2000/01, polyethylene and propane exports brought in revenues of $65 million, and this is set to go up to $100 million in 2001/02.

From 2003, Egypt will be deriving further gains when exports of natural gas start, with the scheduled inauguration of the pipeline to Jordan. This will be followed in 2004-05 with the start-up of a number of liquefied natural gas (LNG) export terminals along the Mediterranean coast.